This Fund Gives Exposure to Large-Cap Growth Companies
By: Jim Woods
The Vanguard Growth ETF (VUG) aims to select mid- and large-cap U.S. companies that exhibit strong growth characteristics.
“Growth stocks” usually refers to companies that are likely to experience higher future revenues and earnings at a faster rate than the industry average. As a result, growth stocks tend to outperform during a market uptrend.
This fact was clearly illustrated in 2017, as the information technology (IT) sector returned an impressive 35.51% to top the gains of all other major sectors, including consumer discretionary (19.92%) and real estate (9.07%). The overall S&P 500 index returned around 19% for 2017.
VUG employs a passive, buy-and-hold approach. It has $31.51 billion in assets under management and an average daily trading volume of $88.63 million. This makes it a very liquid fund. The exchange-traded fund’s (ETF) operating efficiency is reflected in its low expense ratio of just 0.06%. Low expense ratios are a hallmark of many Vanguard funds.
The fund pays a quarterly distribution and has a distribution yield of 1.22%. Its most recent payout of $0.475 on December 27, 2017, was an increase of 15.6% over the previous distribution.
The chart below clearly shows that VUG went nowhere but up in 2017, with its share price increasing nearly every month. The fund touched an all-time high of $142.50 in December and returned about 29% for 2017. Zacks Investment rated VUG as one of the top growth funds of 2017 and has given it a “strong buy” rating.
While VUG is very focused on its goal of investing in large-cap growth companies, the fund spreads its holdings over a basket of 300-plus stocks, with none accounting for more than 7.2% of the fund’s total assets. Roughly 27% of the fund is invested in technology, 20% in consumer services and 12-13% in health care, financials and industrials.
VUG’s top five holdings are: Apple (AAPL), 7.20%; Amazon.com (AMZN), 4.34%; Facebook (FB), 3.80%; Alphabet Inc. A (GOOGL), 2.79%; and Alphabet Inc. C (GOOG), 2.73%.
If you are seeking a straightforward way to get into some of the biggest and best growth stocks, consider looking into Vanguard Growth ETF (VUG).
About the Author: Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. He is the editor of Intelligence Report, Successful Investing and Weekly ETF Report. Jim's books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.